Council repeals housing fee increase

Gives fee opponents 3 months to return with alternative

Business Minute

“You were a history major, I was a religion major,” San Diego Housing Commission CEO Rick Gentry told Gloria, reflecting on earlier attempts at compromise. “Miracles sometimes do happen.”

The council specifically asked Gentry and fee supporters to meet with fee opponents and report back by June to a council committee on progress toward a compromise.

Possibilities mentioned at the council meeting include some increase in the fee, a 2016 bond measure, streamlined permit processing and ways to cut the cost of subsidized housing projects. Councilman Scott Sherman said it can run twice as much to build an affordable housing unit as a market-rate unit.

Cole coupled her support for repealing the measure to a proposed city ballot measure that would increase the minimum wage, an idea the business community and Faulconer also oppose.

“The way to jump-start the economy is by better paid workers,” Cole said.

Several business representatives said the fees would make it hard for them to buy new equipment or hire more employees. A Qualcomm official said his company faced a $5 million charge if it goes forward with additional buildings at its Sorrento Valley location -- a cost that had prompted several suburban cities to appeal to Qualcomm to expand in their jurisdictions, where linkage fees don’t exist.

The only prominent defender of the higher fees to testify was Susan Riggs, executive director of the San Diego Housing Federation.

“As recently as last week, we reached out to the Jobs Coalition and tried to find common ground -- without success,” Riggs said. She preferred going to the voters rather than returning to the bargaining table.

Craig Benedetto, speaking for the Jobs Coalition and commercial development organizations, cast the issue as something like a war.

“I think it’s something we can avoid if we can put down our weapons,” Benedetto said. “We will announce after today the creation of organizations and entities to hold us accountable. Help us de-escalate. We don’t need to go down that path (of a ballot fight).”

Over the years, the commission, which administers the housing trust fund, held a series of meetings to discuss other funding possibilities and formed a task force to make recommendations, but no consensus ever resulted. The current fee generates about $2 million annually to the trust fund with the money used to build and rehabilitate housing and operate various commission programs.

Meanwhile, in a budget move in 2011, the state dissolved more than 400 local redevelopment agencies, including San Diego’s. That step lost the city about $34 million annually in redevelopment property taxes set aside for affordable housing.

The proposed fees, approved by the council in December, would have increased the commercial charge by 2016 from $1.06 to $5.32 per square foot for office buildings, 64 cents to $4.73 per square foot for hotels, 64 cents to $4.96 per square foot for retail space and similar increases for three types of industrial properties. The fees would be increased automatically each year, based on a building cost index.

The commission estimates the higher fees would have generated about $10 million annually, enough to build about 100 dweling units. Developers would have been able apply for fee adjustments from the commission or a wavier from the council if they could show their project had no impact on employment.